Romana Food Brands Corp (RFBC)

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Actually it goes for all Reverse-Merger’ Stocks May Be Prone to Fraud, Abuse, SEC Says in Warning

Just sayin

The U.S. Securities and Exchange Commission cautioned investors about buying stakes in companies that gain listings on U.S. exchanges through so-called reverse mergers, saying they may be prone to “fraud and other abuses.”

Many of the companies, often overseas operations that access U.S. markets by acquiring publicly traded firms with few or no operations, “either fail or struggle to remain viable” and may use small audit firms that don’t verify financial statements, the SEC said today in an investor bulletin.

“Given the potential risks, investors should be especially careful when considering investing in the stock of reverse- merger companies,” Lori Schock, head of the SEC’s investor education office, said in a statement.